Dextran hydrogels were formed in situ by enzymatic crosslinking of dextran-tyramine conjugates (dex-TA)s using horseradish peroxidase (HRP) and hydrogen peroxide (H2O2). Depending on the molecular weight (Mn) of dextran and the degree of substitution (DS) of dextran with tyramine groups, the gelation time varied from about 20 s to a few minutes. Hydrogels prepared from dex-TA (Mn = 3.1 × 104 g/mol) with a DS of 10 had storage moduli up to 60 kPa. Moreover, hydrogels in which chondrocytes were encapsulated had moduli comparable to those without cells. The H2O2/TA mole ratio applied for the preparation of the hydrogels influenced the cell viability of chondrocytes cultured in the hydrogels. A live-dead assay revealed that almost all chondrocytes retained their viability when cultured in hydrogels prepared with a relatively low H2O2/TA molar ratio of 0.2. Histological analysis showed that the encapsulated chondrocytes are capable of maintaining their phenotype as confirmed by the round shape of the cells and production of proteoglycans up to 3 weeks.